efforts to cross-sell products would be severely hampered if the financial reform bill pending in the House is enacted. In an analysis of HR 10 sent to lawmakers, the Financial Institutions Insurance Association said the bill uses a "toxic combination of provisions" to empower state legislatures to effectively bar the joint marketing of banking and insurance products. "HR 10 can effectively destroy the very cross-marketing advantages which banks and insurers, like Citicorp and Travelers, seek in merging," the group wrote. Michael D. White, the group's managing director, said the group hopes the analysis will cause lawmakers either to amend the bill or withdraw it before it comes up for another vote in early May. The hype from the Citigroup and BankAmerica deals may have caused some lawmakers to forget just how objectionable some provisions in the bill are, he said. "We want to remove the rose-colored glasses of these billion- dollar deals and force everyone to look at the nitty-gritty," he said. The trade group's primary concern is that the bill would eliminate the Comptroller of the Currency's authority to exempt national banks from state laws that restrict insurance sales. "HR 10 would not only allow such provisions to stand without the ability of the Comptroller of the Currency to preempt them, but could encourage the introduction of even harsher state legislation by independent agent groups no longer fearful of preemption," the group wrote. Fourteen states have enacted laws restricting how banks may use customer information to target potential purchasers of insurance, the group said. Other state laws bar loan officers from selling insurance and require separate locations for the sale of bank and insurance products, it said. "These state law provisions guarantee to wreak havoc on banks' cross- marketing efforts - which of course is their purpose," the group said. Nine states have passed laws requiring customers to consent before a bank may cross-sell products. The group said these laws, which would be protected under the House bill, hurt consumers because fewer than 10% actually complete the required paperwork. "These banking customers are denied the free flow of information, not because they object to it or are concerned about their privacy, but only because an opt-in rule has been imposed and they either overlooked the notice or, consumed with the responsibilities of daily life, neglected to respond," the group wrote. Industry lawyers were split over whether provisions in the reform bill would hamper cross-marketing efforts. "It would allow the states to discriminate against bank insurance subsidiaries," said Richard M. Whiting, general counsel at the Bankers Roundtable. "That is something from the banking industry's standpoint that must be addressed before there can be any thought of a compromise." Still, Mr. Whiting said it is misleading to concentrate just on a few insurance provisions. "The important thing is that the entire package has to be a delicate balance," he said. "The insurance provisions are important, but not the end-all, be-all." David J. Pratt, senior vice president for federal affairs at the American Insurance Association, said the bank insurance group vastly overstates the significance on the cross-marketing limits in the bill. "There are consumer information safeguards built into the bill, but we think they will be able to construct a regulatory system that will allow substantial cross-marketing while protecting consumer privacy," Mr. Pratt said. A banking lawyer who asked that his name not be used said the bank insurance group's attack is off-target because the comptroller has never challenged a state cross-marketing restriction. Also he said that even if the reform bill were enacted, the National Bank Act would preempt any law that severely restricted bank insurance sales.

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